An activist shows fake banknotes during a demonstration outside the European Commission (EC) headquarters ahead of statements by the EC on the effectiveness of existing measures against tax evasion and money-laundering in light of the recent Panama Paper revelations, in Brussels, Belgium, April 12, 2016.
Reuters/Yves Herman
Hong Kong and mainland China top the global list of people and companies hiding money in secretive offshore tax havens, according to the Panama Papers database made public by a group of global investigative journalists on Tuesday.

Together the two jurisdictions accounted for nearly one in four individuals or parties around the world who established the 366,000 overseas shell companies listed in the database. The Panama Papers exposed 214,000 of them, and the rest were named in an earlier exposé in 2014.

Hong Kong alone contributed almost 26,000 individuals and entities, or 10 per cent of the total, while the mainland added 33,300. They were followed by Taiwan, with 19,600 people or companies involved.

Most of them were not previously known to be operating offshore companies administered by Mossack Fonseca, the Panamanian law firm from which 11.5 million documents were leaked.

Hongkongers owned 10 per cent of the offshore firms, or 51,000, a figure only surpassed by the British Virgin Islands itself.

Most of the famous local politicians, businessmen and celebrities involved have already been named by the media.

Hong Kong’s accountancy lawmaker, Kenneth Leung, described the extent of involvement of a small city of seven million as “shocking”, and urged local tax authorities to follow up.

“Hong Kong can follow France and India, which set up special investigation teams following similar revelations in the past,” Leung said.

While it is not illegal to keep money in offshore accounts, the Panama Papers raised concern about accountability, transparency and dubious deals. They can be used to hide assets and confuse tax authorities.

China's President Xi Jinping arrives for the opening session of the National People's Congress (NPC) in Beijing, China, March 5, 2016.
Reuters/Jason Lee

The practice is common on the mainland as businessmen there can more effectively skirt capital controls or set up joint ventures with overseas partners.

Offshore companies are also popular in Hong Kong as, unlike most countries, there are no laws here requiring shareholders to declare local properties owned through tax havens, Leung said. That means locals can avoid paying stamp duty, for example, in this manner.

Last week, Commissioner of Inland Revenue Wong Kuen-fai said taxmen would follow up on the database release, though he cautioned that not all offshore firms would be involved in tax evasion.

Among current and former politicians found to have opened offshore companies, either for themselves or their previous employers, are innovation and technology minister Nicholas Yang Wei-hsiung, former chief secretary Henry Tang Ying-yen and lawmaker Michael Tien Puk-sun.

The Post, based on materials released by the International Consortium of Investigative Journalists, found that Polytechnic University set up two BVI firms when Yang was a senior manager there.

The secret offshore financial dealings also implicated relatives of President Xi Jinping and other senior Chinese figures, aides to Russian president Vladimir Putin, and celebrities including Jackie Chan and Barcelona footballer Lionel Messi.